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Tarrifs are actually a particularly good example of markets routing around government interference. Routing around tariffs is called smuggling, and has been a

by pg 18y ago

Tarrifs are actually a particularly good example of markets routing around government interference. Routing around tariffs is called smuggling, and has been a huge business as long as there have been governments. I wasn't claiming, incidentally, that markets were totally immune to government interference-- just as networks are not immune to damage. Just that markets will always find whatever room you give them.

davidw 18y ago
I'd bet that smuggling is a tiny trickle compared to what the market could provide with many commodities (wheat, cotton, corn, stuff like that, not diamonds and rhino horns), meaning that the market is not effectively routing around it at all.
- jfoutz 18y ago
  False. In Colombia, 4.5 kg of coca paste, which will yield about one kilo of cocaine, fetches about $4,500. On the streets of the United States, selling this kilogram of cocaine will earn between $200,000 and $600,000. (http://www.colombiajournal.org/colombia150.htm http://www.colombiajournal.org/colombia150.htm) Claritin 10 mg Consumer Price (100 tablets): $215.17 Cost of general active ingredients: $0.71 (http://www.rense.com/general54/preco.htm http://www.rense.com/general54/preco.htm) normalized to 1 kilo ... cost $71,000, value $21517000.00 what did we bet again? :)
  - deleted 18y ago
    [deleted]
  - mseebach 18y ago
    Huh? Your math is off by a few orders of magniture. 100x10mg = 1g, so 1 kg should be 1000x$215.17 = $215,170.00, for an ingredient cost of 1000x$.71 = $710. Also, I can buy 100 x 10mg Clarityn for $65, but I won't, because I can get 100 x 10mg Mildin (exact same active ingredient) for $35. Edit: Oops, forgot to add a point. Your point holds true, your calculations are just for 100 kg instead. Thing is, medicine isn't invented, manufactured sold or bought in a free market. Another difference between Clarityn and coke is that there is a very elaborate framework in place to make sure your pills are good - if your dealer dilutes your coke with flour or ratpoison, you're screwed and nobody cares. If there was no demand/requirement for that protection, I'm sure we could get our pills for around $1.
  - DabAsteroid 18y ago
    one kilo of cocaine ... $4,500 ... On the streets ... between $200,000 and $600,000. ... Claritin ... $215.17 Cost of general active ingredients: $0.71 Your analogy does not work, because it compares two regulated items (cocaine and Claritin), instead of one regulated item vs. one unregulated item.
  - DabAsteroid 18y ago
    Also, your stateside cocaine kilo prices are off by more than 10 times, even factoring in the recent price jump. Here are the latest news stories mentioning stateside prices: http://news.google.com/news?q=kilo+of+cocaine+costs http://news.google.com/news?q=kilo+of+cocaine+costs You used to be able get about $18000 for a key (kilogram, or 2.2 pounds) of cocaine. New you’re seeing prices of $27000, $28000 per key. That’s a big jump. ...
fallentimes 18y ago
Ticket scalping also involves equally fun acts & regulations. Luckily the laws are changing (for the better) which is one reason why it was a good idea to invest in us :-D.
- r7000 18y ago
  Ticketing has been a weird market. There is a strong expectation among consumers that there is a 'fixed price' (face value) and that anything else is 'unfair'. Demand is constrained completely by a venue's capacity leading to all the obvious problems for over-subscribed events.
  - fallentimes 18y ago
    We deal with this every day. An interesting trend is that we've seen more people buying from ticketmaster (since events are selling out & season ticket sales are down) even when tickets on the secondary market are cheaper and "below face". It's ridiculous how obsessed people are with face value even when it's arbitrary and doesn't really mean anything; it gives them a sense of fairness. Also, venues have incentive to sell out as higher margins are associated with concessions, alcohol sales and merchandise. Teams might tell the newspapers they hate the secondary market, but in reality, the majority of them love it. Some even cater to it.
    - r7000 18y ago
      That is incredible. I knew the feeling was strong but to actually influence buyers to pay face value over a discount wasn't what I expected. I guess I was more cynical but the instinct is very strong. It is probably a remnant from when there was no other reasonable option. Why ticket reselling became so vilified I always put down to fan enthusiasm (and therefore irrationality).
  - demallien 18y ago
    This is an important point that the author of the article seems to have not noticed. His whole argument is based on the idea that rent control leads to a decrease in supply, with a resulting hike in price due to unmet demand. But I wonder just how many apartments can really be built in Manhattan? Or in intra-muros Paris, or in the City in London...
pelle 18y ago
Tarifs are indeed an excellent example. Another great example is how too much red tape forces businesses underground in the developing world. The economist Hernando De Soto http://ild.org.pe/en/home http://ild.org.pe/en/home has done studies in many different countries proving this and theorizes that this is one of the main reasons poor countries stay poor.

by pg 18y ago

davidw 18y ago

I'd bet that smuggling is a tiny trickle compared to what the market could provide with many commodities (wheat, cotton, corn, stuff like that, not diamonds and rhino horns), meaning that the market is not effectively routing around it at all.

jfoutz 18y ago
False. In Colombia, 4.5 kg of coca paste, which will yield about one kilo of cocaine, fetches about $4,500. On the streets of the United States, selling this kilogram of cocaine will earn between $200,000 and $600,000. (http://www.colombiajournal.org/colombia150.htm http://www.colombiajournal.org/colombia150.htm) Claritin 10 mg Consumer Price (100 tablets): $215.17 Cost of general active ingredients: $0.71 (http://www.rense.com/general54/preco.htm http://www.rense.com/general54/preco.htm) normalized to 1 kilo ... cost $71,000, value $21517000.00 what did we bet again? :)
- deleted 18y ago
  [deleted]
- mseebach 18y ago
  Huh? Your math is off by a few orders of magniture. 100x10mg = 1g, so 1 kg should be 1000x$215.17 = $215,170.00, for an ingredient cost of 1000x$.71 = $710. Also, I can buy 100 x 10mg Clarityn for $65, but I won't, because I can get 100 x 10mg Mildin (exact same active ingredient) for $35. Edit: Oops, forgot to add a point. Your point holds true, your calculations are just for 100 kg instead. Thing is, medicine isn't invented, manufactured sold or bought in a free market. Another difference between Clarityn and coke is that there is a very elaborate framework in place to make sure your pills are good - if your dealer dilutes your coke with flour or ratpoison, you're screwed and nobody cares. If there was no demand/requirement for that protection, I'm sure we could get our pills for around $1.
- DabAsteroid 18y ago
  one kilo of cocaine ... $4,500 ... On the streets ... between $200,000 and $600,000. ... Claritin ... $215.17 Cost of general active ingredients: $0.71 Your analogy does not work, because it compares two regulated items (cocaine and Claritin), instead of one regulated item vs. one unregulated item.
- DabAsteroid 18y ago
  Also, your stateside cocaine kilo prices are off by more than 10 times, even factoring in the recent price jump. Here are the latest news stories mentioning stateside prices: http://news.google.com/news?q=kilo+of+cocaine+costs http://news.google.com/news?q=kilo+of+cocaine+costs You used to be able get about $18000 for a key (kilogram, or 2.2 pounds) of cocaine. New you’re seeing prices of $27000, $28000 per key. That’s a big jump. ...

fallentimes 18y ago

Ticket scalping also involves equally fun acts & regulations. Luckily the laws are changing (for the better) which is one reason why it was a good idea to invest in us :-D.

r7000 18y ago
Ticketing has been a weird market. There is a strong expectation among consumers that there is a 'fixed price' (face value) and that anything else is 'unfair'. Demand is constrained completely by a venue's capacity leading to all the obvious problems for over-subscribed events.
- fallentimes 18y ago
  We deal with this every day. An interesting trend is that we've seen more people buying from ticketmaster (since events are selling out & season ticket sales are down) even when tickets on the secondary market are cheaper and "below face". It's ridiculous how obsessed people are with face value even when it's arbitrary and doesn't really mean anything; it gives them a sense of fairness. Also, venues have incentive to sell out as higher margins are associated with concessions, alcohol sales and merchandise. Teams might tell the newspapers they hate the secondary market, but in reality, the majority of them love it. Some even cater to it.
  - r7000 18y ago
    That is incredible. I knew the feeling was strong but to actually influence buyers to pay face value over a discount wasn't what I expected. I guess I was more cynical but the instinct is very strong. It is probably a remnant from when there was no other reasonable option. Why ticket reselling became so vilified I always put down to fan enthusiasm (and therefore irrationality).
- demallien 18y ago
  This is an important point that the author of the article seems to have not noticed. His whole argument is based on the idea that rent control leads to a decrease in supply, with a resulting hike in price due to unmet demand. But I wonder just how many apartments can really be built in Manhattan? Or in intra-muros Paris, or in the City in London...

pelle 18y ago

Tarifs are indeed an excellent example. Another great example is how too much red tape forces businesses underground in the developing world. The economist Hernando De Soto http://ild.org.pe/en/home http://ild.org.pe/en/home has done studies in many different countries proving this and theorizes that this is one of the main reasons poor countries stay poor.